International Human Resource Management (IHRM) is concerned with the management of labor of a company that is international in operations. This implies that the company in question has several branches extensions of its parent company in its home country in other nations around the world (Harzing & Pinnington, 2011, p. 13). Multinational corporations are increasingly finding it necessary to conduct strategic international human resource management (SIHRM) due to the global dynamics in the manner in which businesses are conducted. The objectives of SIHRM are built to ensure that the managers are cognizant of the differences in world’s market segments in tailoring the most appropriate IHRM strategies for the Multi-National Corporations (MNC). The nature of IHRM is such that it presents several challenges to managers that are unprecedented due to the multiplicity of differences in the management of operations of the MNC in different countries of the world. Such differences encompass political, social and economic aspects of different regions as well as the cultural differences that also influence the operations of the firm (O'Sullivan, 2010, pp. 421 - 2).
This paper presents several challenges that International Human Resource Managers are faced with when handling operations of their MNCs on a global scale. It aims to develop an understanding of the contribution of various aspects of internationalization of the organization such as cultural differences in influencing the operations of the organization. Further, it discusses the difficulties that IHRM officials face in the recruitment, selection and placement of individuals in various capacities in managing international operations. Particularly, the concept of expatriates and the challenges that management faces in expatriation of employees in regard to the enhancement of their performance are as well presented.
Challenges in International Human Resource Management
According to Harzing & Ruysserveldt (2004, p. 10) internationalization of companies’ operations is increasingly becoming a necessity for an organization to sustain its competitiveness and as well manage to develop growth through profitability of the company. Challenges that abound in the internationalization of the operations of the companies are related to the competitive advantages that are abound in different countries. This ultimately requires that the management tailors the appropriate management approaches such as the strategic distribution of labor into these countries in ensuring the competitiveness of the organization. Therefore, the challenges that IHRM officials are usually faced with are concerned with the management of the workforce. Three fundamental areas of staff concerns arise. These are; the recruitment and selection processes, secondly, the management of the performance of the employees selected and finally the cultural implications that influence employee performance.
Recruitment, Selection and Placement
Mangers in IHRM are particularly concerned with the choice of the staff that are selected to carry out the operations of the organization abroad (Toh &DeNisi, 2007, p. 281). These are usually regarded as expatriates once they are selected and placed (Tungli & Peiperl, 2009, p. 169). Qualifications become very central to the recruitment of such individuals as the success of the organization depends on it. Moreover, the selection of candidates for expatriation on merit serves to ensure that there is fairness in the recruitment process and that the IHRM abides by the law in regard to employment regulations. Such regulations are very specific in regard to discriminating against individuals on the recruitment process (Shim & Paprock, 2012, p. 13). In the United States of America for instance discrimination of persons in the employment sector is illegal under the Civil Rights Act of 1964 which stipulates that discrimination against individuals on the basis of disability, race, color, religion and country of origin is a breach of the Act and hence punishable by law (EEOC, 2014).
Chambers (2013, p. 22) explains that IHRMs of MNCs are constantly faced with the challenge of absorptive capacity that refers the inability of the organization to hire staff (expatriates) who are qualified and well suited for international assignments. This stems from the fact that expatriates usually require training so as to ensure that they are well suited to assimilate in the foreign cultures in which their assignments are relocated in foreign nations (Lee & Wu, 2010, p. 118). Addressing this challenge has presented managers with options such as the replication and standardization of operations of the organization system. In this approach, the IHRMs of MNCs develop a training program that standardizes the approaches that the operations of the MNC in different countries are done. They then deploy expatriates to actuate this standardized management approach in different countries worldwide (Friedman, 2007, p. 157).
Another challenge that the management of the MNC is usually faced with pertaining to the selection of employees to be stationed as expatriates. This stems from issues that may arise sprouting employee conflict (Aguilera & Dencker, 2004, p. 1356). The selection process may be deemed the bias and targeting specific individuals. In such situations, the expatriates may perform poorly in their new appointments provided they are unwilling to relocate into the countries that the management transfers them into (Lee, 2007, p. 403). In this regard, the management of the MNC executing an IHRM strategy should recognize that traditional motivational approaches of employees may not always work as solutions to expatriate employees. According to Lockwood (2003, p. 6), expatriate motivation is particularly driven by their perceived support provision on the part of the organization especially on issues that pertain to work-life balance challenges that they faced with in assimilating and acclimating in new environments. The same sentiments are advanced by Parasuraman & Greenhaus (2002, p. 299), who also note that reduction of work-family imbalances among expatriate workers greatly influences their performance at their duties abroad towards the positive.
Finding an uniform staffing approach is also another challenge that IHRMs have when recruiting staff for assignments abroad. This is particularly driven by the differences that are bound between different country approaches to the recruitment process (Wright et al., 2001, p. 701). Furthermore, there are considerations such as knowledge of the local language and culture of the host country of the expatriate that also have to be considered during the recruitment process. Such consideration is especially important in ensuring the competitive advantage of the organization in a foreign country (Paauwe & Boselie, 2002, pp. 15 - 17).
Performance management on an international human resource management perspective presents unique challenges for the management of the organization that is located in the home country of the MNC. The effective management of the MNC should explore avenues of employee motivation that with effect have an influence on boosting the performance of the organization abroad. The challenge on the management is usually to ensure that they can influence improved performance on the part of the employees by initiating reward programs such as generous pay perks or otherwise to encourage exemplary performance of expatriates(Brown, 2008, p. 1020).
More central though the management of the MNC grapples with the decision on which is the appropriate mode for performance appraisal and are more often than not undecided between which places to conduct the evaluation of employee performance whether the home country or host nation. Firms are always faced with difficulties in deciding whether to adopt a standardized approach in evaluating the performance of expatriates and home based employees. However, this is faced by the challenge of the differences in the social-political and economic frameworks between the economic systems of the home country of the MNC and foreign nations where its extensions are based.
Similarly, factors concerning the mission of an expatriate forms quite a challenge forinternational human resource managers in evaluating the performance of the envoy. Particularly, the comparison of the mandate of different expats and those of home based employees present quite a task in standardization making performance management a perplexing undertaking for the IHRM team. In this regard the IHRM team finds it quit a task to decide whether self-monitoring or strict supervision on the part of the management is the most appropriate approach in the performance management of the MNC.
In other situations the evaluation is deemed inefficient based on the premise that evaluators have no experience and knowledge as the ones they are evaluating. In such situations it is usually the case that evaluators are based in the home country and have no conceptualization of the social political and economic features of the foreign nations in which the expats are based. Hence they are deemed to carry out performance evaluations on a basis lacking of knowledge and experience.
Generally, the challenges that face performance management in international human resource management are concerned with the competence of the evaluator who in most circumstances has no knowledge and experience necessary to carry out the evaluation effectively. Secondly, a lack of understanding of the cultural and national challenges where expats are based i.e. the political, social and economic huddles faced in foreign countries is also a problem in performance management. Lastly, the IHRM also faces huddles in making a choice on the best approach to carry out a performance evaluation i.e. whether home based or foreign nations where expats are based as discussed.
Pay and Rewards
International Human Resource Management is a challenging responsibility that is placed on the management to ensure that equality in the standard of human resource management approaches is replicated throughout the branches of the company in different locations around the world. This decision is greatly hinged on the choice between centralization and the decentralization of the organizations’ activities which include pay and reward systems (Rennie & McGee, 2012, p. 173). The IHRM team usually finds it difficult to put together an expatriate reward package in comparison to a reward package for locals. Even presenting more disparities in these reward systems are the economic, and social, political aspects of the regions where the company is operational (Wright et al., 2001, p. 721). For instance, differences in currencies as well as geography present various aspects of inequalities and hardships between operations of the firm on a global scale. In effect, the IHRM is at pains to ensure the effective management of the MNC in ensuring fairness in its reward and payment systems across the world (Sun et al., 2001, p. 527).
According to Rynes, Bartnuke & Daft (2001, p. 340), HRMs are increasingly becoming ignorant of research that is conducted on local regions pertaining to the implications of reward systems and payment systems. Instead, IHRMs are continuously applying standardized payment reward mechanisms across the board in their international conglomerates (Osman-Gani, 2000, p. 234). Studies show that, as a result of this, the implications are that there is development of inequality in the reward system. There should be a consideration of aspects of the local economies that will serve as appropriate reward systems given the circumstances. For instance, the assumption that money is the most appropriate reward system is not often true since in saying a region of hardship such as a desert an expatriate would prefer to be given plenty supply of water enough to make a swimming pool as a reward (Richardson, 2000, p. 209).
The importance of the IHRM management in evaluating changes in the home market in relation to the changes in the global arena is quite central in ensuring that the management strategies adopted serve to re-establish the competitiveness of the firm (Anyim et al., 2011, p. 1). There is also a need to revise the policies for the management of international human resource such that the approach adopted whether standardization of devolution serves to yield the greatest benefits for the MNCs (Briscoe et al., 2009, p. 118).
Cultural differences between the nation of the home country of an MNC and the host country as earlier mentioned present several difficulties for the management in terms of the acclimation of expatriates in host countries. Of particular worry for International Human Resource Managers is the difficulty that expatriates experience while adjusting to the cultures of the host country (Adler, 2008, p. 278). According to Jorgensen, Becker & Mathews (2009, p. 458), an employee who performs at their duty is one possesses requisite knowledge and skills required for the completion of the mandate. However, on top of this in ensuring the success of the organization and outstanding performance the employee must add cultural fit aspect knowledge and skills that they possess. Hence, an understanding of the local culture where an expatriate is stationed is paramount for the success of the employee and the MNC generally. (Jorgensen , et al., 2009, p. 458). Essentially, an understanding of the culture of the host country will make it easier for an expatriate to conduct business with locals to the betterment of the MNCs business in a foreign country. International HRM managers must, therefore, provide avenues for training the expatriates on foreign culture in order to capitalize on the benefits that accrue to the business as a result of cultural integration (Noruzi & Westover, 2011, pp. 299 - 300; Som, 2008, p. 1282).
International Human Resource Management (IHRM) has been discussed in the context of challenges that human resource managers face in effecting international or global strategy in the management of the corporations’ business. Among challenges discussed are issues that pertain to the management of cultural adjustments by expatriates sent out to conduct business on behalf of the MNC in foreign nations. Challenges regarding the payment and reward system fairness concerns brought about by the location of the firm’s operations in different locations, in the world have also been discussed. Likewise, the discussion details challenge that international human resource managers are faced with when recruiting, selecting and posting of individuals to work in foreign extensions of the MNC. Primarily, the paper is a detailed discussion of several challenges that international human resource managers face in developing strategies for staffing and allocating its labor force in several extensions of the multinational organization.
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